NEW YORK – Hertz is one-step closer to its long-awaited prize.
More than two years after its original bid, Hertz agreed Sunday to buy Dollar Thrifty Automotive Group Inc. for about $2.3 billion, giving it more ways to attract travelers and expand its international presence. It will also give the company a leg up against competition from an increasing number of smaller competitors.
At $87.50 a share, the deal is worth far more than any of Hertz’s previous bids and about 8 percent higher than Dollar Thrifty’s closing price Friday.
Nothing will change immediately for consumers. Travelers that rent through Dollar Thrifty will still visit that counter for service. In the long run, prices in many markets will almost certainly rise as the two companies streamline their operations.
Both rental companies have grown stronger and more valuable in the years since they first considered teaming up. Both stocks have almost doubled in value, and they’ve reported robust quarterly financial results as the volume of car rentals soared. But still-fierce competition has prevented price increases, which has dragged on revenue. Fewer big competitors mean a better chance of higher rates.
The push-and-pull between two of the nation’s largest car rental companies started in 2010. Avis Budget Group was also in the mix, pursuing a bid for Dollar Thrifty for more than a year.
Avis dropped its bid nearly a year ago citing market conditions. Then, in October of last year, Hertz dropped its bid, too. But Dollar Thrifty didn’t trust that the years of attempts were over.
In February, it extended its shareholder rights plan known as a poison pill – a maneuver designed to deter any unsolicited attempts to take over the company – through May 2013.
More recently, it appeared Dollar Thrifty was open to another bid. Earlier this month, it urged for either a compelling offer or an end to the constant distraction of merger speculation.
Hertz shares gained $1.06, or 8 percent, to close at $14.21 Monday.
Dollar Thrifty shares rose $6.08, or 7.5 percent, to $87.08.